What the Web Didn’t Deliver — High Economic Growth

There is a great article by Charles Kenny in this month’s (June 2013) Bloomberg Businessweek, which looks back to year 2000 and the promises and predictions of what the Internet was going to bring to our society:

The Group of Eight highly industrialized nations met in Okinawa in 2000 and declared, “IT is fast becoming a vital engine of growth for the world economy. … Enormous opportunities are there to be seized by us all.” In a 2000 report, the president’s Council of Economic Advisers said, “Many economists now posit that we are entering a new, digital economy that could inaugurate an unprecedented period of sustainable, rapid growth.”

It hasn’t quite worked out that way. The Internet has had a dramatic impact on people’s lives and how they spend their time. It sparks uprisings, makes shopping easier, helps people find their soul mates, and enables governments to collect troves of useful data on potential terrorists—and, apparently, on their own citizens. What the last decade demonstrates, however, is that the information revolution hasn’t generated economic prosperity. It’s tempting to believe an innovation can unlock the secret to high growth. But that way of thinking is almost certainly wrong…

So what happened to the promised Internet miracle? To understand why everyone using the Web doesn’t automatically lead to growth, think about television in the 1970s. It was broadcast to the home for free; all we had to pay for was the set and the electricity to run it. With only a small expenditure, we spent hours a day watching TV. Today, 209 million Americans spend an average of 29 hours a month online, according to Nielsen; the 145 million U.S. Facebook visitors spent an average of six hours last January on that site alone. And each month, YouTube users spend 6 billion hours watching videos—more than 600,000 times as long as it took Michelangelo to paint the Sistine Chapel. We pay for the computer and Internet connection, but for all of the hours we spend doing it, surfing the Web is a cheap form of entertainment…